Reason for another recession in USA

By | May 9, 2013

US Stock market are life time High and but on economic indicators are warning USA is heading for another recession.

So why do U.S. stocks continue to skyrocket? As per History Stock market in intial stage ignore the reality and keep pushing yp with so much liquidity around pumped by Fed and ECB.   Unfortunately, as we have seen so many times in the past, when stocks do catch up with reality they tend to do so very rapidly.  So you better put on your seatbelts because a crash is coming at some point.

Lets discuss the reason which are giving inkling another recession is coming.

1. The price of copper has traditionally been one of the very best indicators of the future performance of the U.S. economy.  The fact that it is down nearly 20 percent so far this year shows manufacturing activity is slowing down.

2. Retail sales of clothing is growing at the slowest pace since 2010,but while major store sales are about to drop negative YoY for the first time in over 3 years, the utter collapse in general merchandise sales is worse that at the peak of the last recession at -5%. It seems tough to see how a nation with an economy built on 70% consumption is not in a recessionary environment

3. Manufacturing activity all over the country is showing signs of slowing down.  In fact, Chicago PMI has dipped below 50 (indicating contraction) for the first time since the last recession.

4. In April, consumer confidence unexpectedly fell to a nine-month low.The Thomson Reuters/University of Michigan preliminary index of consumer sentiment declined to 72.3 in April from 78.6 a month earlier. This month’s reading was lower than all 69 estimates in a Bloomberg survey that called for no change from the March number.

5. The S&P 500 usually mirrors the performance of Chinese stocks very closely.  That is why it is so alarming that Chinese stocks peaked months ago.  Will the S&P 500 soon follow?

6. Economic data coming out of the Chinese economy has been terrible PMI worst in 2 years

7. Unemployment in both Greece and Spain is now about 27 percent, and the unemployment rate in the eurozone as a whole has just set a brand new all-time record high.

8. Crude inventories have soared to a record high as demand for energy continues to decline.Good for India Though 🙂

So  Looking at above points its giving an inkling of Recession coming in USA

 

 

One thought on “Reason for another recession in USA

  1. guest

    US Economy is better than any other economy currently, this is beyond doubt.. all base metals going not because demand contraction..but they are heavily oversupplied which is expected given ramp up in supplies in response to high prices in last decade..and China is moving away from investment driven economy to consumption driven one… Crude oil inventories is going up not because of less demand but due to shale gas and oil boom in US.. Jobless claims and jobs numbers are showing economy is improving even better..

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